Gov't shouldn't send checks to seniors, or anyone. DEBIT cards instead.

The government is considering sending a $250 check to every social security recipient. The common case against doing so is well explained here:

http://www.nytimes.com/2009/10/28/business/economy/28leonhardt.html

But moreover, I think that a stimulus program should not send checks to anyone. Regardless of whether it's Obama's proposed $250 to seniors, or the Bush $300+ that went to everyone.

Instead, if the government wants to give money away to individuals for the express purpose of stimulating the economy, it should send debit cards rather than checks.

Checks will often be deposited and saved. Or used to pay down existing debt. These are both worthwhile things, and can both help individuals who need help... but they do not accomplish the goal, they do not serve the purpose for which the money is being send out in the first place. For it to work as stimulus, the money must be spent. On new consumption. And quickly.

So I would suggest payments in the form of debit cards, with some additional twists:

* the debit cards should expire in a short time... say, 60 days. That way the stimulus happens when needed; and any money not spent within that time would automatically return to the government's coffers, unspent and available for future programs, debt reduction, whatever. There is no stimulus benefit in giving this money away to people who are not going to spend it right away.

* the debit card should have higher value when paid with a physical swipe through a card reader. For example, a $50 debit card purchase might only reduce the card's balance by $25 if physically swiped (essentially turning, say, a $100 debit card into a $200 debit card, if all of its purchases were made through card readers). This would encourage people to spend their stimulus funds locally, to help increase the ability of the stimulus to help all communities and help people where they live. After all, local economies are not helped when stimulus money is spent at amazon.com.

takes me to a different article about social security checks.

on edit: wait, never mind, I thought your post was an excerpt from the link. I read too quickly!

I'd much rather have given the banks a processing fee on this than the bailout money we gave them for, what was that again? Oh yeah, nothing.

'checks' the unemployed are actually losing money on the bank fees to get their money.

Worse.

The "Banking Reform Act of 1999" signed by Clinton and engineered by the sinfully greedy, has created such an awful situation that even Foundations that exist to help the poor against the banking powers do not know what to do. That 1999 Act was so convoluted and so conveniently written in legalese that no one knows how to resolve any of the various problems now inflicted on the working poor.

I can guarantee you that at least 50% of seniors won't understand your limitations. Anyway, most of us spend our Social Security check as soon as we get it.

Of all the people who complained about my idea, I think your objection is most valid, that many seniors may simply find it confusing. I hadn't thought about the fact that, simply based on their age, they have largely lived their life in a world without debit cards, and the concept may still be foreign to them. I would not be surprised if the percentage of seniors who have ever used one is quite low. (Heck, I'm only in my 50s and I've never used one, though I understand the concept.) Explaining it, and the need to presumably activate the card and use it with some sort of pin, could be a substantial barrier indeed.

I'll also add another complaint about my idea that no has brought up... many seniors are not very mobile, making it harder for them to spend at places where they have to physically swipe a card.

So I will concede that the debit card idea may be more problematic for something aimed specifically at seniors, as opposed to something for the general population as the Bush payments were.

Still, I think some thought needs to be given to helping assure that stimulus spending actually stimulates. That's not to say that certain groups (seniors, whoever) might not deserve some break of some sort on other grounds, but that's really a different conversation apart from whether a stimulus program is indeed doing what it is specifically intended to do.

Appreciate it. :sarcasm:

Oh, and urec.

If the government put together this kind of program, they could conceivably negotiate a very minimal percentage to go to the banks... really enough to just cover costs. There would be a couple of ways to go... they could either build in a very small profit, or make its non-profitness tied to the fact that they were bailed out by government funds in the first place.

But let's just say that a program along these lines (perhaps not for seniors specifically, as discussed elsewhere in the thread) actually really helped stimulate the economy more than a cash payment would. Would the fact that banks got any benefit out of it at all (which they might) be sufficient reason to not do it? Does that not sound like cutting off your nose to spite your face?

Would not be so unbridled!

If you had been poor recently you would understand that the banks have done more to destroy Americans who are impoverished than almost any other force in America.

I now use a check cashing service because at least the fee is a flat three percent up front.

Here's two example's of how awful banks are:

One: I call a bank that issued a credit card and that required a minumum payment each month. In calling to find out what my minumum payment was, I was assessed $ 9.95, so I expected professional service.

I truly wanted to know what was being required of me - and this seemed like a way to handle it.
Although at that point in time, $ 9.95 was a small fortune.

The bank told me I needed to send in $ 15 that week for the minumum. I immediately did so.

Then I got dunned for $ 29.00 non-payment of the minimum. As it turns out, that month was my anniversary of joining and I needed a $ 59.00 membership fee paid with the minumum! I can think of no reason in the world why if they could dun me $ 59 for not paying the "minimum" that then they should not have mentioned that the existence of this fee when I called! To say I was seething over this is no slight exaggeration.

Two: Two years ago this coming Thanksgiving - It was 48 hours before Turkey day and for the first times in along time, we had enough money to have Turkey with all the trimmings. It felt good knowing that.

I went in to the gas station, and I paid at the pump using a debit card. I got $ 15 worth of gas! In doing that, the bank behind the debit card began a hold of $ 75 for 72 hours on my remaining funds. This was the first month any bank in Lake County did this - and I had no idea that such a policy could even occur.

To say I was seething would leave out the important part of the story - I was depressed too. Once again, no Turkey on Thanksgiving.

If every bank in the nation went into some abyss and never came back out I would be glad. We would get rid of the scum suckers on Wall Street, we would get rid of the scum suckers locally. I personally would rejoice.

A lot of people I know are resorting to barter. Why bother going into a store and using a debit card and then getting into some weird situation? Why not just go to swap meets, make friends, have some coffee and cookies, and get good deals.

raise that no seniors will get in their social security for the next year because there was no inflation. It's money the seniors will need to help them with the raise in supplemental insurance, medicines, dental, eye care, gas, and food. Those are essentials to seniors, not frills.

re: "It's money the seniors will need to help them with the raise in supplemental insurance, medicines, dental, eye care, gas, and food. "

Most of that can be paid for with debit cards too.

I wasn't talking about seniors specifically, though that was the the starting point... I was talking about how the government distributes money in general. IF money is going to be given to any group for the purpose of helping them out in some way, that's one thing. But if the government is saying it is doing for the purpose of economic stimulus, then it should do it in a way that stimulates the economy.

Meanwhile, the article is arguing against giving seniors the money AT ALL. And people here are taking me to task for suggesting it be in the form of a debit card? Which helps seniors AND actually accomplishes the intended goal? I don't understand all the negative reaction.

a pre-loaded debit card. The fees and hidden costs of those things are almost criminal. Ever read the fine print on one of those "gift cards" that are so popular at X-mas time?

The only people who will make out in your scenario are those of the banking industry.

On edit: I do agree with you about the venom thrown about here. The name calling and berating is a bit too much at times. We can disagree without insulting each other. :hi:

re: "The fees and hidden costs of those things are almost criminal."

That's true of many cards, but there's no reason those things *must* be there, it is certainly possible to create a card without them. And thanks for your p.s. :-)

You should be ashamed of yourself.

Some folks would think that it is a charge card. If they want to give people on SS and extra $250 dollars add it to the deposit or check that we are already sending them! It will get spent, no worries! Sounds like a waste of postage, processing and millions of plastic cards to boot!

and what do you propose happens to the two dollars left on them at the end. Give it back to the bank? I just got my cell phone rebate in the form of a debit card. I bought a shift cable for my car 78.and some change and 20 dollars worth of gas. I have a dollar and some change left on it. Where am I going to spend a dollar and some change? This is just another moneyt maker for the banks. Is that who your employer is?

re: "and what do you propose happens to the two dollars left on them at the end. Give it back to the bank?"

As I said, "any money not spent within that time would automatically return to the government's coffers"


re: "This is just another moneyt maker for the banks. Is that who your employer is?"

This is the thing I find most unpleasant about DU, the way that so many people here attack people and their motives rather than address issues or simply accept that even we on the same side can have slightly different perspectives from one another. I don't know why people have to reply to calm, reasoned "alternate" comments with accusations of a hidden agenda (freeper, puma, stockholder, troll, employee, whatever).

(And, btw, the answer is no, I am not employed in the financial sector in any way.)

collectively, I think Dems are against government payments in the form of debit cards. It has been expressed here by many, time after time.

re: "why would you be promoting that form of payment?"

I think I gave the reasons in my post. It seems a reasonable mechanism for helping make sure that money that is supposed to be used for stimulus purpose is more likely to actually be used that way. Maybe there are other ways, feel free to suggest!



re: "collectively, I think Dems are against government payments in the form of debit cards. It has been expressed here by many, time after time."

This is not a dogmatic thing to me, about being for or against debit cards. It's looking at them as a tool, which like most things, can be used in ways both good and bad.

so I spend my debit card on the essentials I need every month, and use my SS that I would have spent on that, paying down my debt. Duh!

Of course money is fungible, so there's no way to dictate how a specific source of funds will be used... as you say, you can just switch which money you use for different things. But there is a tendency for people to follow the path of least resistance, so there would be *some* benefit along the lines of what I described.

Two years ago 80% of SSA payments were via direct deposit involving no check at all. These are not stimulus checks, there is no need to hand fees to the middle thieves, you are suggesting that the money being spent be doubled and that is a budget problem, and of course, it is illegal to place requirements of any kind on Social Security payments. In addition, the people getting these payments are already the group that most instantly spends any funds they get, because that is the nature of living on tight money. They payments go also to those who get SSI, and they will have planned for and spent the money quickly on things they have been waiting to be able to afford. All of them, because if they had money, they would not be on SSI. See? They buy things like a new space heater, a coat...food.
So. You misunderstand the method of payment, the reason for the payment, the nature of the payees, and suggest a confusing scheme that will benefit only banks and card processors.

re: " it is illegal to place requirements of any kind on Social Security payments"

It is arguable that separate, additional stimulus funds mailed to people who are on SS are not, themselves, SS payments.


re: "All of them, because if they had money, they would not be on SSI. See?"

Not true. Social Security is not need-dependent. Bill Gates will get his SS checks when he reaches that age.

if you don't have direct deposit and you get two withdrawals in a month for free before they charge normal ATM fees. Fuck that.

and every other slur imaginable just because you have the audacity to propose something out of the ordinary.

:(

but there are not nearly as many local and small businesses as there are Walmarts. The preponderance of that money will be spent at Walmart, or some other big box type store.

Let me ask you a question, look at this graphic.



http://www.lcurve.org/

The center of the field is the average income (that tiny little bump), and the far right hand side is the top 1% of earners (the huge red line going off into space). The money in our economy travels one way, toward the top earners. What kind of stimulus is going to fix that?

Saving the money given to them would at least keep the money at the bottom. What are these top 'earners', a leviathan that needs to be fed or it will come and kill us all? They get paid for owning stocks - because they had money to buy those stocks, and can move their money around creating volatility that makes them even more money. Their cash has a gravitational field at this point.

People in our nation have traded most of their future for survival now, they call it credit/debt. People like to complain about irresponsible behavior, but even the ones who were irresponsible got sold things they couldn't really afford (because wages have been stagnant for so long especially compared to inflation). They've been told they must have them to be an equal human being to the rest of the people they deal with. They have very few options on where to buy goods. Avoiding the big box is nearly impossible.

The only way we've been chugging along for the last 30 years is because people have been selling their futures. We would have been here long, long ago (at the 'new normal') had people not fallen for the credit scam back then - and they thank St. Ronald for that.

Is it not obvious that the system is severely broken? Is our only interest the stock market and GDP, neither of which even remotely reflect the quality of life for the average citizen? I understand the desire to spark consumption, and thus jobs, but this can only be a very temporary fix.

The underlying fundamentals are off. Our basic system has a fatal flaw and it's ripping apart the fabric of our nation. Don't you think it's time to repair the actual problem, rather than treat the symptoms?

:hi:

Thanks but no thanks for your misguided plan.

:patriot:

That's rock bottom.

Check that NYT link in the OP. It's an Obama stimulus plan, to give more money to people on Soc Sec.

Look, of course I'm not against giving more money to people who need it. But

a) If that's what you're trying to do, then say that's what you're trying to do. Don't say it's a stimulus program if that's not what it is. But if it IS supposed to be a stimulus program, then they should make sure it is implemented in a way likely to create stimulus.

and

b) If instead it is indeed designed to help people on fixed incomes who need the money, then it should be needs-based. Everyone over a certain age gets SS whether they need it or not. Retirees may be "fixed income" as you say, but it doesn't always mean low income, or poor. The wealthy retirees get SS too. If the purpose is to help people who need it, then just give it to the people who need it.


All that said, even if I use the term "fixed income" as you did (implying someone of limited means), I don't agree with you're conclusion about it being rock bottom. I mean, if the government is going to give $250 to someone and tell them to go out and spend it to spur the economy, I'd much rather they gave that $250 of extra spending money to the people of limited means. Rock bottom would be giving the $250 checks to the rich instead of the "fixed income" (limited means) folks. You know, like the Republicans would rather do! I don't see giving spending money to people who can really use it as rock bottom at all.

It's a check to help replace a raise that no seniors will get in their social security for the next year because there was no inflation.

re: "It is NOT a stimulis plan"

Did you read the NYT article linked in the OP? It says it is being offered as a stimulus plan.

It makes sense that there is no COLA (inflation-based raise) if there was no inflation. Of course, you can say that seniors should get more regardless, but that's a different conversation. But to say that the $250 is to make up for an inflation adjustment that didn't happen (because inflation didn't happen) is the kind of reasoning that NYT article is arguing against.

If Obama wants to send the money because he thinks seniors are being shortchanged by the current system, that's one conversation. If he says it will be an effective economic stimulus, that's a different conversation. It's hard to have a conversation when two people aren't talking about the same thing!

Unless a senior had $0.00 in the bank and/or their bi monthly (60 day consumption) was less than $250 they simply would use the debit card to spend money they otherwise would have spent using cash in the bank.


Senior has $500 in bank and normally spends $300 during month and receives $250 check.

With a check:
Senior deposits it and has $750, doesn't spend $1 more than normal so spends $300 and has $450 in bank at end of the month.
End result: $300 consumption & $450 in bank

With a debit card:
Senior doesn't spend a single $1 more than normal. Spends $300 via $250 debit card and $50 from checking. End of month has $500 - $50 in bank = $450.
End result: $300 consumption & $450 in bank

I like that your name matches your post. :-)

But I see the math a little differently:

Senior has $500 in bank and normally spends $300 during month -- to a large extent, on bills that he mails checks for and on things are taken out of his bank account as direct withdrawals

With a $250 check:
Senior deposits it and has $750, doesn't spend $1 more than normal so spends $300 and has $450 in bank at end of the month.
End result: no extra consumption & $450 in bank. Extra stimulus to economy = Zero.

With a $250 debit card:
Senior does much of his usual $300 spending as he does every month, out of his checking account, because that's how he does it every month, or because it is partially automated, or because it is for bills that need to be paid by check. Senior has a $250 debit card that he must use this month, or lose. To some extent, he uses it on things he would have bought anyway, via credit card or cash withdrawal from the bank, things like groceries. But hey, maybe that's only $100, and there's $150 more on the card to spend. So he buys the new shoes he's wanted, and a gift for his grandson, and whatever else strikes his fancy.
End result: $150 extra consumption & $300 in bank. Extra stimulus to economy = $150.

And of course, if the government does neither of these things, no $250 bonus payment of any sort,
End result: no extra consumption & $200 in bank.

Note that only the middle scenario helps the senior (putting more in his bank account AND letting him buy some extra stuff) AND stimulates the economy, both.

(Of course, all these numbers are not meant to indicate actual amounts of bills and expenses... I just used your numbers to illustrate how "bonus" money can more easily find its way into one "pocket" or another depending on how it is provided.)

Proudly unrecommend. Most Seniors would indeed SPEND that money pretty damn fast

the upcoming election cycle in 2010.

Soc Sec recipients (I am one) were told in Jan of 2009 not to expect a COLA increase for maybe the next two or three years. This was right after a 5.8% increase, one of the largest ever. This was followed by a $250 stimulus check in the early spring.

Now the talk is another $250, which is real close to the amount one would see in a normal COLA (they have usually been around 2.4%.) Typical soc sec ck is around $1,100 X 12 X 2.5% = slightly more than $250, but it's close.

This will work to their advantage. Give out a check every spring rather than COLA in December, and maintain soc sec pmts at the current - saves money in the long run. An added benefit is the group of weasels who are in congress at election time can say to the (large) block of elderly voters "Look what we did for you this year, AND last year too. Now, vote for me, and we'll see that you get another $250 next spring."

And we will vote for them, because they have the "name we know."

Oh yes. They will also vote themselves a nice fat stimulus of some sort to replace their missing COLA this upcoming Jan 1st.

Smoke and mirrors, and weasels.

re: "This will work to their advantage. Give out a check every spring rather than COLA in December"

This isn't a choice they have. Whether or not they give you a COLA is not based on their whim, it's based on the calculation of inflation. If the numbers say a COLA is due, you get it. They can't say "Let's cancel the COLA and give them this other thing instead", it's not a choice they make based on what's to their advantage (politically or economically). As far as I know, the COLA is the COLA, based on a formula. Zero, 5.8%, whatever it turns out to be. Any other "bonus" money they provide is unrelated to that.

manipulate things to their advantage. Ever.

I missed the Al Gore inauguration - how did it turn out?

How about that stash of WMDs in Iraq "they" said was there. Quite a find, don't you think?

"Mission Accomplished" worked out quite well, what?

we already have debit cards for. It would be redundant. Seems like your case is typical RW hogwash to stop the government from spending that money. Believe me most seniors do spend the extra check. We have to because the cost of living is still going up faster than we on fixed incomes are getting money for even if they say it's not.

re: "Money is deposited into our accounts, which we already have debit cards for. It would be redundant."

The difference would be -- strictly from an economic stimulus perspective -- that extra money added into your account doesn't *have* to be quickly spent, money on the proposed debit card I described *would* have to be quickly spent... therefore, more stimulus.

use it for purchases at a store and then request cash back.

So I can buy something for five bucks and then ask for 20, 30, or even more dollars back right there.

I don't know what the limit is, so maybe it's possible for someone to make a very minor purchase and request a hundred or more back.

Then that person can pay off bills with it or put it in the bank anyway.


We Seniors have all sorts of tricks up our sleeves.

:7

Her Social Security money helps pay for her care. And she doesn't need any new stuff.

A check or direct deposit is so much easier than dealing with a debit card.

A better way would be to transfer the funds through direct deposit and mail checks to those who don't have it set up or don't have a bank account.

It's completely true that your grandmother would benefit more from a check or direct deposit.

If the proposed Obama $250 payment is primarily for the purpose of providing extra money to seniors, just giving them money is indeed the best way to accomplish it.

If, however, the proposed Obama $250 payment is primarily for the purpose of providing economic stimulus (using seniors as a socially responsible conduit toward that end), then it may not be the best way to accomplish *that* purpose. That's my point.

Government debit cards, operated by government I am fine with this proposal.

Banks put "holds" on debit card monies and use them to help themselves for two to six days at a person's expense.